US poll surprise gives Dhanteras twist for gold buyers

On Wednesday, gold prices surged over 2% amid a weaker US dollar and declining Treasury yields, sparking a surge in demand for the precious metal following Democrats' gains in the US midterm elections. In India, 24-karat gold prices rose to ₹14,280 per gram, a 2.26% increase from the previous day.

The rally occurred days before Dhanteras, a holiday in India when gold purchases typically see a significant uptick. While higher prices may deter some buyers, jewellers anticipate demand to remain robust, buoyed by the positive sentiment stemming from the US election outcome.

Surendra Mehta, national secretary of the India Bullion & Jewellers Association (IBJA), anticipates a potential 12% year-on-year surge in Dhanteras gold sales, up from his earlier forecast of 7-10%. The IBJA attributes this growth to sustained demand over the past week and the possibility of buyers accelerating purchases despite rising prices.

Mehta believes the election results may constrain US President Donald Trump's options regarding the Iran war, potentially lowering oil prices and alleviating global economic pressure. The political shift may also lead to increased scrutiny of AI and data-center expansion, particularly concerning electricity costs, resource consumption, and regulatory measures, according to Nitin Kedia, national general secretary of the All India Jewellers & Goldsmith Federation (AIJGF).

While stronger Democratic influence could check AI-related investments, this might trigger market volatility and dampen expectations for silver's industrial demand. However, a potential easing of geopolitical tensions could also diminish gold's safe-haven appeal.

Domestic price movements in India will hinge on the rupee's performance against the dollar, with a weaker currency potentially offsetting some of the gains from global gold prices and keeping local rates elevated.